Fidinam & Partners has selected relevant news about international taxation, Covid-19 impact an tax matters and updates on multilateral developments. Stay tuned for relevant news periodically by filling our form below.
DMCC - COVID-19 Pandemic: Tax Authority Extends Zero-Rating on Medical Equipment Importations
The UAE Federal Tax Authority (FTA) has extended the zero-rating VAT on certain medical equipment imported and used for protection from COVID-19. The extension is granted until 31 December 2021. The "medical equipment" to which the temporary zero-rating rules apply are personal protective equipment used for the protection from COVID-19, containing the features and meeting the specifications determined and specified by Ministerial Decision No. 380 of 2020. Such medical equipment is limited to:
- medical face masks that are not included in the Cabinet Decision No. 56 of 2017 on Medications and Medical Equipment Subject to Tax at Zero Rate (of approved standards 14683 and UAE.S ASTM F2100);
- half-filtered face masks (UAE.S EN 149);
- non-medical "community" face masks made from textile (UAE.S 1956);
- single-use gloves (UAE.S ISO 374-2); and
- chemical disinfectants and antiseptics intended for use on the human body, but excluding detergents, cosmetics and personal care products (UAE.S EN 1276, EN 1650, and EN 14476:2013+A2).
Source: IBFD
Australian Taxation Office Releases Draft Guideline on Imported Hybrid Mismatch Rule
The Australian Taxation Office (ATO) has released Draft Practical Compliance Guideline PCG 2021/D3 which contains practical guidance as to the ATO's assessment of the relative levels of tax compliance risk associated with hybrid mismatches, based on the extent to which taxpayers have obtained information to establish the non-application of the imported hybrid mismatch rule, or the "neutralization" of any imported hybrid mismatch in respect of non-structured arrangements.
PCG 2021/D3 sets out the factors that the ATO will take into account in the assessment of risk in connection with the imported hybrid mismatch rule, including the ATO's approach to reviewing whether a taxpayer has undertaken reasonable enquiries in relation to the rules for non-structured arrangements. It also includes a description of the supporting information the ATO will require for a taxpayer to demonstrate compliance in connection with non-structured arrangements.
Specifically, PCG 2021/D3 notes that other members of a taxpayer's group may have undertaken an analysis based on the OECD principles or a foreign jurisdiction's equivalent of the imported hybrid mismatch rule. However, given each country's implementation of the rules and their statutory positions, the outcome of that analysis may not necessarily be consistent with the application of Australia's anti-hybrid rules. As such, the person responsible for preparing the Australian income tax return should review the analysis undertaken (including all working papers) to determine whether the application of Australia's rules results in a different outcome. Where the outcomes are different, it is not sufficient to only rely on the analysis performed for the other jurisdiction; the taxpayer must ensure that its obligations under Australia's rules are met.
The Guideline also includes a risk assessment framework with a description of risk zones as applicable to the imported hybrid mismatch rule.
Practical Compliance Guidelines are ATO documents that describe the ATO's compliance approach in administering a specific area of the tax law.
Source: IBFD
Hong Kong Enacts Tax Concessions for Carried Interest
On 28 April 2021, the Legislative Council passed the Inland Revenue (Amendment) (Tax Concessions for Carried Interest) Bill 2021 that exempts from tax carried interest distributed by eligible private equity funds operating in Hong Kong. The Bill was passed on the third reading and will come into operation on the day it is published in the Gazette.
Source: IBFD
COVID-19 Pandemic: Germany and Switzerland Prolong Mutual Agreement on Frontier Workers Until 30 June 2021
The mutual agreement concluded between Germany and Switzerland on 11 June 2020 regarding the taxation of income earned by frontier workers during the COVID-19 pandemic (see Germany-1, News 16 June 2020) is prolonged until 30 June 2021. The Swiss tax authorities made this announcement on 28 April 2021. Previously, the mutual agreement had already been prolonged until 31 March 2021. In addition to the prolongation of the mutual agreement, a paragraph was added to the agreement, clarifying that for purposes of article 5(1) and (4) of the Germany - Switzerland Income and Capital Tax Treaty (1971) (as amended through 2010), an employee working from home due to COVID-19 pandemic measures will not create a permanent establishment for the employer.
Source: IBFD
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